Proposed opening of coal sector to private players: Angel Broking

"At a time when the debate is raging on the wisdom of not privatizing the large PSU banks fully, the government has taken the bold step and now proposes to open up coal mining to the private sector. For long, Coal India and its regional subsidiaries, had a virtual monopoly over coal mining in India. To boost the supply of coal, the government cleared new auction guidelines which will permit private players to participate without any pricing or end-use restrictions. Coal is critical to the Indian economy because nearly 75% of the power generated in India is thermal power, which is heavily reliant on coal supplies.

Under the new guidelines, Indian and international companies will be allowed to participate in coal auctions with the condition that they will infuse top-of-the-line technology into coal mining. Global mining giants like BHP, Rio Tinto, Anglo American and Glencore have been long expressing interest in prospecting coal in India. Currently, only aluminium and power producers are allowed to bid for captive mines in India. But, under the new guidelines there are virtually no restrictions and could be the first step towards the full privatization of mining sector in India. According to industry estimates, coal blocks will be commercially viable to private players only if they are offered in minimum blocks of 40-50 million tonnes. The revenue from these coal auctions will go the respective states and that should result in good buy-in from the states too".

Shares of COAL INDIA LTD. was last trading in BSE at Rs.310.25 as compared to the previous close of Rs. 304.65. The total number of shares traded during the day was 747886 in over 4024 trades.

The stock hit an intraday high of Rs. 311.95 and intraday low of 302.1. The net turnover during the day was Rs. 231004053.

Source : Equity Bulls

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